A neighbor peeks into an unoccupied, foreclosed home in East Los Angeles. (Mel Melcon / Los Angeles…)
A month after nearly halting foreclosure sales in reaction to tighter federal regulation, Wells Fargo & Co. and Citigroup Inc. are still selling seized properties at a sharply reduced pace, according to a research firm that tracks Western foreclosure filings.
The slowdown illustrates the continuing fallout from scandals that erupted in 2010 over “robo-signed” foreclosure documents, bank staffs that struggled to process loan modification applications reliably, and other borrower complaints.
The lenders paused many foreclosures in response to a regulatory bulletin spelling out detailed guidelines for handling delinquent borrowers in the final 60 days before their homes are sold to third parties or taken back by the banks. The notice took effect on May 6.
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Wells' foreclosure sales were still “dribbling along” as of this week at a quarter of their former pace, said Madeline Schnapp, director of economics research at PropertyRadar. The Truckee, Calif., firm tracks foreclosures in Nevada, Arizona, Oregon and Washington as well as the Golden State.
“For example,” Schnapp said in an email, Wells foreclosure sales in California totaled “25 during the last week of May compared to over 100 per week prior to the [Office of the Comptroller of the Currency] ruling.”
“Citi's foreclosure sales the last week of May were 12 compared to an average of 30 per week during the month of April,” she said.
JPMorgan Chase & Co. cut back on foreclosure sales for a week beginning May 6 and then resumed its former pace of sales.
Bank of America Corp. never slowed sales of seized houses, saying it already complied with the late-stage foreclosure guidelines issued by the Treasury Department agency that regulates national banks, the OCC.
The OCC said in a statement provided by spokesman Bryan Hubbard that it “did not direct a slowdown or pausing” of foreclosure sales.
“However,” it said, “if servicers are not certain they are meeting these standards, pausing foreclosures is a responsible and productive step toward ensuring the mortgage servicing industry is treating customers fairly and operating in a safe and sound manner.”
The banks have declined to say exactly what portions of the timelines and checklists provided by OCC are causing the continued delays.
A Wells Fargo mortgage spokeswoman said the bank is making "slow and steady" progress on assuring itself that its procedures are unassailable. "We're just covering all our bases."
A Citi spokesman said the bank is "in the process of complying and following the directive set forth in the OCC guidance."
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